Strategic management.Chapter 1

The Internal
Assessment
Chapter Four
Copyright ©2017 Pearson Education, Inc. 4-1

Key Internal Forces
Distinctive competencies
A firm's strengths that cannot be easily
matched or imitated by competitors
Building competitive advantages involves
taking advantage of distinctive
competencies.

The Process of Performing an
Internal Audit
The internal audit
Requires gathering, assimilating, and
prioritizing information about the firm's
management, marketing, finance, accounting,
production/operations, research and
development (R&D), and management
information systems operations
Provides more opportunity for participants to
understand how their jobs, departments, and
divisions fit into the whole firm

The Resource-Based View (RBV)
The Resource-Based View (RBV)
Approach
contends that internal resources are more
important for a firm than external factors in
achieving and sustaining competitive
advantage

Proponents of the RBV contend that
organizational performance will primarily
be determined by internal resources that
can be grouped into three all-
encompassing categories:
physical resources
human resources
organizational resources

For a resource to be valuable, it must be
either (1) rare, (2) hard to imitate, or (3)
not easily substitutable.
These three characteristics of resources
are called Empirical Indicators
These enable a firm to implement
strategies that improve its efficiency and
effectiveness and lead to a sustainable
competitive advantage.

Organizational Culture
Organizational culture is “a pattern of
behavior that has been developed by an
organization as it learns to cope with its
problem of external adaptation and
internal integration and that has worked
well enough to be considered valid and to
be taught to new members as the correct
way to perceive, think, and feel.”

Management
The functions of management consist
of five basic activities:
planning
organizing
motivating
staffing
controlling

The Basic Functions of
Management
Planning: forecasting, establishing objectives,
devising strategies, and developing policies
Organizing: organizational design, job
specialization, job descriptions, span of control,
coordination, job design, and job analysis
Motivating: leadership, communication, work
groups, behavior modification, delegation of
authority, job enrichment, job satisfaction, needs
fulfillment, organizational change, employee
morale, and managerial morale

The Basic Functions of
Management
Staffing: wage and salary administration,
employee benefits, interviewing, hiring,
firing, training, management development,
employee safety, equal employment
opportunity, and union relations
Controlling: quality control, financial
control, sales control, inventory control,
expense control, analysis of variances,
rewards, and sanctions

Marketing
Marketing
the process of defining, anticipating,
creating, and fulfilling customers’
needs and wants for products and
services

Marketing
Customer Analysis
the examination and evaluation of consumer
needs, desires, and wants
involves administering customer surveys,
analyzing consumer information, evaluating
market positioning strategies, developing
customer profiles, and determining optimal
market segmentation strategies

Selling Products and Services
Selling
includes many marketing activities,
such as advertising, sales
promotion, publicity, personal
selling, sales force management,
customer relations, and dealer
relations

Product and Service Planning
Product and Service Planning
includes activities such as test marketing;
product and brand positioning; devising
warranties; packaging; determining product
options, features, style, and quality; deleting
old products; and providing for customer
service
important when a company is pursuing
product development or diversification

Pricing
Pricing
Five major stakeholders affect pricing
decisions: consumers, governments,
suppliers, distributors, and competitors
Sometimes an organization will pursue a
forward integration strategy primarily to gain
better control over prices charged to
consumers.

Marketing Research
Marketing Research
the systematic gathering, recording, and
analyzing of data about problems relating to
the marketing of goods and services
can uncover critical strengths and
weaknesses

Cost/Benefit Analysis
Cost/Benefit Analysis
Three steps are required:
1. compute the total costs associated with a
decision
2. estimate the total benefits from the
decision
3. compare the total costs with the total
benefits

Production/Operations
Production/operations function
 consists of all those activities that transform
inputs into goods and services
Production/operations management deals
with inputs, transformations, and outputs
that vary across industries and markets.

The Basic Functions (Decisions) Within
Production/Operations
4-21

Value Chain Analysis (VCA)
Value Chain Analysis (VCA)
refers to the process whereby a firm determines
the costs associated with organizational
activities from purchasing raw materials to
manufacturing product(s) to marketing those
products
aims to identify where low-cost advantages or
disadvantages exist anywhere along the value
chain from raw material to customer service
activities

Benchmarking
Benchmarking
an analytical tool used to determine whether a
firm's value chain activities are competitive
compared to rivals and thus conducive to
winning in the marketplace
entails measuring costs of value chain
activities across an industry to determine
best practices

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